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Imagine going to the grocery store and being told that the price you'd pay for food would depend significantly on whether you had a job and where you worked. If you worked for one company, you'd get milk and bread at a price close to what the store paid the wholesaler. If you worked for a different company, you would have to pay 20 percent or 30 percent more. If you didn't have a job at all, you'd have to pay three or four times as much. Same milk and bread, same store, but a different price for different customers.

Bizarre, right? Yes, but that's exactly the way things work in our health care system. What hospitals "charge" is double, triple or quadruple what it actually costs them to perform a procedure. But the only people expected to pay those full charges are those who don't have insurance. In most cases, those are the people who can least afford to pay.

If you have insurance, your health plan typically pays only a percentage of the published charge amount, but the discount may be bigger or smaller depending on which health plan you have. Same procedure, same hospital, but a different price depending on where you work.

How big of a discount do hospitals give health plans? That's a closely guarded secret, but on average in Pennsylvania, hospitals are only paid about one-fourth of what they charge. If you have insurance and you've had a procedure performed, you'll see the discount on your "Explanation of Benefits" form, where it lists both the amount that was charged and the "allowed amount," i.e., the discounted price paid by your health plan.

The difference between what is charged and what is actually paid by those with insurance varies dramatically from hospital to hospital. Several years ago, the Pennsylvania Health Care Cost Containment Council issued a report showing the published charges and the actual payments that hospitals received for heart bypass surgery. In some hospitals -- such as Butler Memorial, Excela Westmoreland, Jefferson Regional and the Medical Center of Beaver -- patients without insurance were charged about twice as much as those with insurance. At other hospitals -- such as Allegheny General, St. Clair and Washington Hospital -- the charges were about 2.5 to 3 times as much as what insurance plans paid.

But at a couple of hospitals -- UPMC Passavant and Presbyterian/Shadyside -- the charges were quadruple what the hospitals were actually paid by insurers. However, even though the UPMC hospitals gave bigger "discounts" than the other hospitals, the average amounts they were actually paid were still higher because their charges were so much higher than the other hospitals; i.e., regardless of whether you had insurance, the cost of treatment was higher at those hospitals than at most of the others.

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